“Bajaj Corp Ltd (BCL) has acquired Uptown Properties and Leasing Pvt Ltd (Uptown) for Rs75 crore (including liabilities of Rs49.5 crore). Uptown owns a building in Worli (Mumbai) with a built-up....
Sharekhan is bullish on Bajaj Corp and has recommended buy rating on the stock with a target of Rs 142 in its September 30, 2011 research report.
“Bajaj Corp Ltd (BCL) has acquired Uptown Properties and Leasing Pvt Ltd (Uptown) for Rs75 crore (including liabilities of Rs49.5 crore). Uptown owns a building in Worli (Mumbai) with a built-up area of 33,600 square feet. The sole reason behind the acquisition is to develop a corporate office on the acquired plot to bring in all the scattered divisions at various locations under one roof to improve the operational efficiencies. Judicious utilisation of free cash on the books to expand its product range or to grow inorganically was one of the key triggers in the stock and the market was enthused by the recent launch of the cooling hair oil, Kailash Parbat, which was in line with the stated strategy. However, the move to spend a substantial chunk of this cash on non-yielding assets such as property, that too at a premium, would dilute its earnings and is seen as a de-rating factor by us. More so, since the company would have to spend additional Rs15-20 crore on either refurbishing the existing property or rebuilding a new structure.”
“To factor in the deal, we have downgraded our earnings estimates by 1.6% and 2.4% for FY2012 and FY2013 respectively. The BCL stock has already reacted negatively to the announcement of the property deal and factors in the negative implication of the same at the current market price. Going forward, any initiative on the company’s part to expand its limited product portfolio or strengthen its core business would be the key upside trigger for the stock. At the current market price the stock trades at 13.4x its FY2012E earnings per share (EPS) of Rs7.8 and 11.1x its FY2013E EPS of Rs9.5. We maintain our Buy recommendation on the stock with the price target of Rs 142 (15x FY2013E earnings as against 16x earlier due to the not so judicious use of free cash on the books),” says Sharekhan research report.
Bodies Corporate holding more than 50% in Indian cos
Sharekhan is bullish on Bajaj Corp and has recommended buy rating on the stock with a target of Rs 142 in its September 30, 2011 research report.
“Bajaj Corp Ltd (BCL) has acquired Uptown Properties and Leasing Pvt Ltd (Uptown) for Rs75 crore (including liabilities of Rs49.5 crore). Uptown owns a building in Worli (Mumbai) with a built-up area of 33,600 square feet. The sole reason behind the acquisition is to develop a corporate office on the acquired plot to bring in all the scattered divisions at various locations under one roof to improve the operational efficiencies. Judicious utilisation of free cash on the books to expand its product range or to grow inorganically was one of the key triggers in the stock and the market was enthused by the recent launch of the cooling hair oil, Kailash Parbat, which was in line with the stated strategy. However, the move to spend a substantial chunk of this cash on non-yielding assets such as property, that too at a premium, would dilute its earnings and is seen as a de-rating factor by us. More so, since the company would have to spend additional Rs15-20 crore on either refurbishing the existing property or rebuilding a new structure.”
“To factor in the deal, we have downgraded our earnings estimates by 1.6% and 2.4% for FY2012 and FY2013 respectively. The BCL stock has already reacted negatively to the announcement of the property deal and factors in the negative implication of the same at the current market price. Going forward, any initiative on the company’s part to expand its limited product portfolio or strengthen its core business would be the key upside trigger for the stock. At the current market price the stock trades at 13.4x its FY2012E earnings per share (EPS) of Rs7.8 and 11.1x its FY2013E EPS of Rs9.5. We maintain our Buy recommendation on the stock with the price target of Rs 142 (15x FY2013E earnings as against 16x earlier due to the not so judicious use of free cash on the books),” says Sharekhan research report.
Bodies Corporate holding more than 50% in Indian cos
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